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Mayor vetoes key ordinance in city budget

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Hazleton City Council will have one less proposal to consider when budget talks resume next week.

Mayor Joseph Yannuzzi said in a memorandum on Thursday that he vetoed a tax rate ordinance that was ratified by a former council majority last December.

Eliminating tax rates leaves the council with no way to fund the budget that was approved by the former majority last December.

Tax rates that were set by the ordinance hinged on a former majority's plans for using $450,000 from a dormant sewer transmission account to reduce property tax rates. The ordinance passed on final readings by 3-2 votes. It sets tax rates at 4.06 total mills.

The tax rate for the former majority's budget would have been a reduction from the 4.51 mills that funded the 2013 city budget - and is 1 mill lower than an amended, 5.06-mill spending plan that the administration released last week. The administration's latest budget proposal eliminates $500,000 in maintenance fees for the storm water system, but increases property taxes to make up for the lost storm sewer money.

Yannuzzi did not respond to a message left at his office on Thursday afternoon, but explained his reasons for vetoing the tax rate ordinance in a memorandum to city council.

"It is not sufficient enough to fully fund the debt service included in the 2014 budget because the amendment to the ordinance is a failed amendment," the mayor wrote.

The mayor opined that council cannot initiate a transfer, that sewer transmission fees that the former majority wanted to use for reducing debt are not part of the 2014 budget, and that the budget requests an increase in a line item that must be approved by council on a "vote of a majority plus one."

Yannuzzi said in the memo that he would present a new ordinance for council's consideration that would "fulfill the obligation of the 2014 budget."

Councilman Keith Bast, who voted last December in favor of the budget that the mayor rejected, disagrees with the mayor's reasoning for the veto.

Bast contends that council wanted to use money from a dormant sewer transmission account to reduce part of the millage rate that pays city debts. Since the city turned its sanitary sewer lines over to Greater Hazleton Joint Sewer Authority, it is no longer obligated to use money from the sewer transmission account for maintaining the sewage collection system, he said. Council wouldn't need to seek approval for a transfer, Bast argues.

"There was no transfer," Bast said. "The (sewage transmission) money wasn't in the budget. There's nothing we can do with it except to pay off debt. That's what we decided to do with the money - utilize it for what it's there for."

Bast said he's disappointed with the development, saying the administration's latest budget proposal is a way for Yannuzzi to implement the 80 percent property tax increase that he lobbied for in 2013.

"I felt that (former council members) and I came up with a good way to use what we had within the city to give the people of the city a break and still fund the budget," Bast said. "It seems like he's still trying to re-do his 80 percent increase and raise taxes (in 2014). If there's any kind of different solution, he doesn't want to hear it. Basically, it's his way or nothing."

Bast said that Robert Moore, a CPA with Dennis R. Moore & Associates, told him that council was able to use the money to pay debts. City solicitor Chris Slusser also opined that council could use the money to pay debt because the city transferred the sewer lines to the joint sewer authority.

Moore on Thursday said that the city's "sewer improvements fund" is classified as a special revenue fund that is earmarked for a special purpose. In the city's case, the money was earmarked for a sewer system that was taken over by the joint sewer authority, he said.

If a special fund runs a surplus, the money could be transferred to the general fund to cover the city's operating costs, he said. The transfer should be authorized by motion or resolution, as required under municipal code, Moore said.

Alternatively, council can opt to use money from the sewage transmission account to pay debt, he said.

"The main point is that once excess revenues remain in a special revenue fund, they normally are used for the purpose of that fund," Moore said in an email to the Standard-Speaker. "However, the Sewer Improvements Fund is going away as all responsibilities now are part of the (joint sewer authority) according to the administration and solicitor and they feel no additional obligations remain with the City. In that case, there is no reason not to take those funds and bring them into the general fund and utilize them in the most appropriate manner that is determined by Council."

sgalski@standardspeaker.com

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